Archive for December, 2009

In real estate, there are those who succeed and those who find themselves in the losing end. Sometimes it is inevitable and understandable why some people would filing for bankruptcy and therefore give up the valuable properties they have worked hard for. The economic downturn may be one influential factor among others, but the issue now lies on getting and bouncing back. Thus most people would strive hard in order to be successful in getting a mortgage after bankruptcy. This may sound odd but it is a very possible thing to start with after all.

Is it hard to get a mortgage after you are bankrupt?

Definitely time is an important element in the scenario that must be given utmost consideration. Standard in many lending companies that a two year interval should be given to those who have declared bankruptcy to file for a home mortgage and if you really want to be a homeowner one more time, then you must have the determination and resolve to wait for a couple of years and finally get your application approval. This would actually give you ample time to deal with your finances, find ways to generate and augment your budget and thus increase your chances of getting approved for a mortgage application.

What are the other things you need to do?

In order to avoid the same predicament to happen to you, it is imperative that you stay stable in regard to your employment status. This could also serve as a very good source of background credibility in case the lenders would make certain background checks to asses and be the basis of your mortgage approval. One very important thing to note is to try staying with the same company or employer for this would mean the stability of your work as well as the other financial compensation that accompany this professional stability. Lenders would look for the potentials of the applicant in terms of paying his required fees and other conditions before granting the mortgage and income is definitely a concrete evidence of that potential.

What about your past credits?

You have declared bankruptcy generally because of the credits you may have incurred which you most likely cannot cope up with. Financial losses are inevitable especially during recession but you must find ways in order not to keep these credits get in your way of acquiring a home mortgage. One important way to do this is to carefully evaluate and correct certain errors you may find in your credit reports. Basically, all debts are considered closed whenever a person would declare he is bankrupt, thus if you find any discrepancies like an outstanding credit despite of your declaration, you may want to make the necessary corrections because consequently these errors would greatly affect and influence your mortgage application and approval as a whole.

It’s always a wise venture to engage in salient investments like getting a mortgage after bankruptcy for it is a manifestation of another fresh start. Diligence and a great sense of financial management are only just a few of the things to get you back to business in the vast world of real estate again.

One of the trickier issues in filing an individual bankruptcy is how to handle the situation in which the debtor is married, but his or her petition is individual as opposed to joint, i.e. the spouse does not join in the filing for bankruptcy.  Of particular importance in this scenario is how to properly account for the debtor’s income and expenses on the B22A (‘Means Test’) calculation form.  In general, there are 3 possible scenarios when the prospective filer is married:

 ‘Married, filing jointly’: This is the most common, and conceptually the easiest to handle.  As both spouses are participating in the bankruptcy, they are thought of as one economic unit, and so will have both incomes included on the form B22A (‘Means Test’) schedule.  Likewise their combined expenses should be reflected on the Schedule J (statement of) Current Expenditures (i.e. the detailed list of monthly living expenses such as food, clothing, shelter, utilities, taxes, transportation, medicine, etc.). 

‘Married, not filing jointly, without declaration of separate households’: This situation is a little less common, and hence a little trickier.  The debtor is filing without the participation of his or her spouse, who nevertheless does reside with the debtor.  Because of this fact, the non-filing spouse’s gross income must be included with that of the debtor’s for purposes of the means test calculation (Likewise, the non-filing spouse’s expenses must be listed on the debtor’s Schedule J, thereby enabling a fairer evaluation of the financial position of the debtor’s household).  This means that the debtor may run afoul of the means test even if his or her income is far below the applicable means test income limit if the non-filing spouse’s income, when added to that of the debtor’s, results in a total in excess of the applicable limit.  Equally frustrating for a would-be debtor is when his or her income might be hopelessly insufficient to cover the debts in his or her name but, when the non-filing spouse’s income is factored in, the combined income is adequate to cover the combined household expenses.  This situation will trigger a 707(b) trustee objection just as surely as would a combined gross income in excess of the applicable means test threshold figure.

 ‘Married, not filing jointly, with declaration of separate households’: By checking this box, the debtor is literally declaring, under penalty of perjury, that “My spouse and I are legally separated under applicable non-bankruptcy law or my spouse and I are living apart other than for the purpose of evading the requirements of § 707(b)(2)(A) of the Bankruptcy Code.”  This means that the debtor should be prepared to testify under oath, and to also document the fact if requested to, that the non-filing spouse’s income is truly not available to contribute toward the debtor’s expenses, and that the debtor is not merely pretending to be separated so as to exclude the spouse’s income from the means test calculation.  The debtor’s petition should include neither the non-filing spouse’s income (Spousal, child, or other support payments, if received by the debtor from the non-filing spouse, are listed by debtor as a separate income item) nor expenses, which by virtue of the debtor’s declaration are presumed to be applicable to an entirely separate household. 

Of course, be sure to seek the advice of an experienced bankruptcy attorney before you decide upon a course of action on this or any other bankruptcy issue.